Do I Need to Complete a Self-Assessment?

The deadline to notify HMRC that you must complete a self-assessment tax return is quickly approaching, but it can be tough to know if you need to complete one. HMRC have criteria for who needs to submit a return. This varies depending on the income that you receive.

What is a Self-Assessment?

A self-assessment reports income to HMRC which has not yet been taxed. Unlike employment income, where Income Tax and National Insurance are deducted from a person’s wages, the tax on other types of income is not deducted when it is received. This means that the tax must be collected through a self-assessment.

Self-assessments are currently submitted per tax year. Each tax year covers the period 6th April to 5th April. This means that the current tax year is 6th April 2023 to 5th April 2024. A shift towards quarterly returns will be introduced when Making Tax Digital (MTD) comes into effect.

Who Needs to Complete a Self-Assessment?

HMRC have set criteria which determine who should submit a self-assessment. As there are many ways to earn an income, eligibility is based on the type of income you have received during the tax year. You can find the information which applies to you by clicking the bullet points below:

Sole Traders and Self-Employed Individuals

If you are self-employed or a sole trader, you must submit a self-assessment tax return if you earn over £1,000 in the tax year.

Please note that you must notify HMRC that you have become self-employed within 3 months. Failure to do so will result in a £100 fine.

Income from Property Rental

If you receive income from a renting out a property that you own, you must complete a self-assessment. This will include your rental income and allowable expenses for the tax year.

Allowable expenses are costs relating to the property that you have paid. These include repair costs, water rates, cleaner’s fees, and rental costs if you are sub-letting. Please be aware that any costs paid by the occupants cannot be included on your return

If you are earning between £1,000 and £2,500 a year, contact HMRC. They will advise you whether a tax return is needed.

Dividend Income

If you are a company director or shareholder who receives dividends, you must complete a tax return.

Dividend tax thresholds follow the same bands as Income Tax, with the rate increasing as your taxable income increases. Dividend tax calculations can be affected by the personal and dividend allowances.

Business Partnership Income

If you are part of a business partnership, you must include the share of income you have received on a self-assessment. This is separate from your partnership tax return, but both must be submitted. On your self-assessment this income will be declared on an additional page called SA104.

High Taxable Income

You must complete a tax return if your adjusted taxable income is more than £150,000.

Adjusted net income is your total taxable income before any personal allowances have been applied, less certain tax reliefs (such as Gift-Aid donations and trading losses).

Capital Gains

If you have sold an item at a profit, which can be classed as an asset, you may have to pay capital gains tax. This must be included on your self-assessment.

You will have to pay capital gains tax on personal possessions worth £6,000 or more (excluding cars), business assets, and certain types of shares.

Sale of property will class as a capital gain if is not your main home, if you have let out your main home, or if you have used part of your home exclusively for business. Property gains must be reported to HMRC, and the tax must be paid, within 60 days of the sale. The figures submitted must still be included on your self-assessment, but you will not be taxed further if you have paid the capital gains tax.

High Income Child Benefit Charge

You will need to submit a self-assessment if either you or your partner receive Child Benefit, but one of your adjusted net incomes is more than £50,000. This is because you will receive a tax charge known as the High Income Child Benefit Charge. If you both have incomes greater than £50,000, whoever earns more will pay the charge.

The threshold for this charge will increase from the 2024/25 tax year.

Income Received from Abroad

If you are a UK resident and receive foreign income this must be included on a self-assessment.

If this income has already been taxed in another country, you may be eligible for Foreign Tax Credit. This is dependent on the double-taxation agreement that the UK has with the other country.

UK-Based Income for Non-UK Residents

If you are not a UK resident, you will still need to submit a self-assessment if:

  • you receive rent from a UK property
  • you sell goods or services/run a business in the UK
  • you have a pension outside the UK but you were UK resident in one of the 5 previous tax years
  • you have other untaxed UK income

Your tax will be calculated automatically on the days you work in the UK if you are employed in this country but live elsewhere.

I Am Eligible for Self-Assessment – How Do I Notify HMRC?

If you meet the criteria to submit a self-assessment, but have not received a notification, you must notify HMRC before 5th October by registering for self-assessment online.

If you have received a notification letter, or a self-assessment form, from HMRC you must complete and submit a tax return. You will receive this if HMRC are aware that you need to submit a return.

I Want Help to Complete My Self-Assessment – Who Can I Ask?

Accountants can register you for self-assessment and submit tax returns on your behalf. Once you have engaged with an accountant, they can request the relevant information from you and prepare your self-assessment for submission. If you are interested in our services, please do not hesitate to contact us.

If you need further information on how to pay your self-assessment tax please use our blog resources.

 

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Companies House Fees Increasing – What to be Aware of

As of 1st May 2024, Companies House have implemented significant price increases for there services. These changes will impact anyone who submits information to Companies House, so it’s important to assess how the increases will affect your business.

Why have Companies House Fees Increased?

The changes to Companies House fees have been introduced to reduce fraud. The UK’s company registration structure is often linked to fraud and money laundering.

The Economic Crime and Corporate Transparency Act 2023 (ECCT Act) puts forward a long-term plan to reduce fraud. The most recently implemented part of this plan is increasing the price of Companies House services. The changes aim to deter criminals from forming and registering multiple companies to commit fraud offences.

How Will These Changes Affect Me?

For these changes to reduce fraud, the costs of Companies House services must be increased significantly. Unfortunately, this means those lawfully trading will also be greatly affected.

Some of the higher costs relate to overseas entities. This is because they are commonly used to commit fraud. However, the fees with the highest percentage increases tend to be the more commonly incurred costs, such as incorporating new companies which is now more than 300% more.

As the cost of these services increase, costs for agents (such as accountants) to submit information on your behalf will also be increasing. If you are unsure whether this will impact your business, contact your agent to discuss the changes.

The most common fee changes are as follows:

Companies House Fees for Limited Companies

Service Old Cost Cost from 1st May 2024 Percentage Increase
Incorporating a New Company £12 £50 317%
Incorporating a New Company – Same Day £30 £78 160%
Submitting a Confirmation Statement – Digital £13 £34 162%
Changing a Company’s Name £8 £33 313%
Striking Off a Company £8 £33 313%

Companies House Fees for Limited Liability Partnerships (LLPs)

Service Old Cost Cost from 1st May 2024 Percentage Increase
Registering an LLP £40 £50 25%
Filing a Confirmation Statement £13 £34 162%
Administrative Restoration £100 £468 368%

Companies House Fees for Limited Liability Partnerships (LLPs)

Service Old Cost Cost from 1st May 2024 Percentage Increase
Register an Overseas Entity £100 £234 134%
Updating an Overseas Entity £120 £234 95%
Removing an Overseas Entity £400 £706 77%

Other Changes from the ECCT Act

Companies House will be seeing further changes as part of the ECCT act to make their services stricter and more difficult to abuse. Some changes were implemented on 4th March, which included:

  • Companies House being granted greater powers to query info and request evidence, as well as being able to remove factually incorrect info.
  • Companies must have a registered address – PO boxes no longer allowed.
  • Companies must provide a registered email address on Confirmation Statement submissions.
  • Must confirm company is formed for a “Lawful Purpose” & “intended future activities will be lawful” on Confirmation Statement – This will usually appear as a tick box on digital and software submissions.
  • Companies House can now share data with other government departments and law enforcement.

Further changes are also expected such as additional identity verification for company owners and improving ownership transparency by providing additional shareholder information.

The timeline for additional changes is currently unclear. For example, it is expected that limited partnerships will need to provide more information to Companies House in the future. These changes cannot be implemented without secondary legislation.

Companies House will also be following HMRC’s shift to digital submissions. Software is already available to submit confirmation statements, but no date has yet been provided to swap from paper to online.

 

If you have any further questions about these changes, or you need help submitting information to Companies House, please do not hesitate to contact us.

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Final Payroll 2024

With the end of the 2023/24 tax year approaching, the time has come to prepare the final payroll. Submitting the last payroll of the year has a few extra steps. It’s important to know how to prepare for it.

When does the Final Payroll End?

The final payroll will be the last payroll you submit before the tax year ends on 5th April 2024. If your workers are paid monthly their last payroll will always be Week 52 as they will always have 12 pay days. For weekly, fortnightly, and four-weekly payrolls, they could have a Week 53.

Week 53 payrolls are caused when there are 53 pay days during the year. If you pay your employees on Fridays, this year you may have a week 53 payroll if you last processed your payroll on the following dates:

  • Any new employees are set up on your payroll software.
  • Any employees that have left have been processed as leavers.
  • Tax codes for 2024 are up to date.

What Should I Check Before Running the Final Payroll?

Correcting mistakes on the final payroll can be more difficult than other periods. Because of this, we would recommend double-checking all figures before processing them or sending them to your payroll provider. You should also check for the following:

  • Any new employees are set up on your payroll software.
  • Any employees that have left have been processed as leavers.
  • Tax codes for 2024 are up to date.

How do I Submit the Final Payroll?

HMRC will be notified that a submission is for the final payroll through either a Full Payment Submission (FPS) or Employer Payment Summary (EPS). If you outsource your payroll, this will be done by your provider.

How do I Correct the Final Payroll?

If you need to change the figures included on the final payroll, the corrected FPS must be submitted by 19th April 2024.

If the wrong payment date is shown on the FPS, the corrected FPS must be submitted by 5th April 2024.

What are P60s?

A P60 is a form issued to all employees showing their earnings and tax deductions for the tax year.  It is needed when completing the employment section of a Self-Assessment tax return. P60s must be sent before 31st May 2024.

What are P11Ds?

P11Ds are forms that must be submitted to HMRC to show the expenses and benefits provided to employees during the tax year. Examples of benefits include company cars, interest-free loans, and private medical insurance. The deadline for 2024 P11D submissions is 6th July 2024.

Changes from April 2024

Once the final payroll has been submitted, you should review the changes that may be needed during the new tax year. Increases to the National Living Wage were announced in November, whilst a decrease in National Insurance was confirmed during the Spring Budget.

You should also check if you have received any 2025 tax codes for your employees. These will be received either pay post or through your HMRC PAYE portal.

 

If you need any further information about the final payroll for 2024, or any other payroll services, please do not hesitate to contact us. We also provide a Payroll Year End Checklist which could be used as a guide.

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Spring Budget 2024

On 6th March 2024, Chancellor of the Exchequer, Jeremy Hunt, announced the government’s plans for the UK economy in the Spring Budget. With a focus on lowering inflation and increasing the countries GDP per capita, the chancellor set out plans to be enrolled over the next few years. But how will these changes affect business owners and taxpayers?

National Insurance Cuts

The most notable change announced during the Spring Budget was a 2% cut in employee National Insurance (NI). This is on top of the 2% cut announced in the Autumn Statement last November. This means that, from 6th April 2024, employee NI will drop to 8%; the lowest rate since 1975. Those earning an average salary of £35,400 will save £450.

It is important to note that these changes only apply to the basic NI rate. Any earnings over £4,189 per month will still be taxed at 2%.

Previously, NI for the self-employed (known as Class 4) was set to decrease to 8% from April 2024. The Spring Budget has announced a further 2% reduction. This means those who are self-employed will be taxed at 6% from next month.

Employer NI contributions will not be changing according to the Spring Budget. The rate will remain at 13.8%.

VAT Threshold

Another significant announcement from this year’s Spring Budget relates to the VAT threshold. The threshold will increase from £85,000 to £90,000. This is the first rise the VAT threshold has seen since 2017.

The increase has been introduced to prevent smaller businesses from falling into the VAT regime due to rising inflation and the cost of living crisis. However, many are worried that this increase of only £5,000 may not be enough to cover the cost increases.

Capital Gains Tax

The higher rate of Capital Gains Tax (CGT) on residential property sales will decrease. The Spring Budget states that the rate is being cut from 28% to 24% from 6th April 2024. The basic rate on property sales will remain at 18%. CGT only applies to certain property sales – you can find out more here.

High Income Child Benefit Charge

A raise of the High Income Child Benefit Charge (HICBC) threshold to £60,000 was also announced in the Spring Budget, along with raising the withdrawal taper from £60,000 to £80,000. This will increase from April 2024.

The charge allows child benefits to be taken back from higher earners through the tax system and has been unchanged since its introduction in 2013.

The rise will be introduced to prevent basic rate taxpayers having to complete tax returns for only their HICBC. This issue was caused by the tax thresholds increasing for the 2021/22 tax year, pushing the higher-rate bracket above the original £50,000 threshold.

Additional Changes

The following are additional changes announces during the Spring Budget:

  • Non-Dom status will be abolished from April 2025. A new system will be introduced where no tax will be paid on non-UK income for the first 4 years of being in the UK. UK tax rates will apply after this period.
  • Multiple dwellings relief will be abolished. This allowed Stamp Duty Land Tax relief for transactions where two or more dwellings were purchased at once.
  • The furnished holiday lets regime will cease from April 2025. This allowed short-term lets to receive tax reliefs like small businesses.
  • A New UK ISA will be introduced, allowing individuals an additional £5,000 annual investment in UK assets.
  • Fuel Duty freeze has been extended for a further 12 months.
  • Alcohol Duty will be frozen until February 2025.
  • Vape Duty will be implemented from October 2026. An increase in Tobacco Duty will occur at the same time.

 

If you have any questions about how the budget could affect you or your business, please do not hesitate to contact us.

 

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Vehicle Benefits In Kind Breakdown

If your company provides vehicles or fuel to its employees or directors, these could be classed as Benefits In Kind (BIKs).

BIKs are defined as an item of monetary value provided by a business that is not “wholly, exclusively, and necessary” to perform their duties. This essentially means that the item is also used outside of work. Examples include private healthcare and company cars.

Using this definition, if you have received a vehicle through a company and use it for personal mileage it will be a BIK. If the fuel costs are covered by the employer this is also a BIK.

Calculating Employee Benefits In Kind for Vehicles

When it comes to vehicles, the way the BIK tax owed by employees is calculated depends on the type of vehicle. Recent legislation changes to how vehicles are classified should be considered when assessing how you account for new vehicles.

Vans

Benefits for vans are calculated as flat rates which are multiplied by the individual’s tax band. For 2023/24, the annual Van Benefit charge is £3,960, whilst the Fuel Benefit Charge is £757.

A basic rate (20%) taxpayer would owe:

Van Benefit Charge = 3960*20% = £792

Van Fuel Benefit Charge = 757*20% = £151.40

Total Tax Owed = £943.40

Cars

Calculating the BIK for cars is more complicated as you must use a BIK percentage. This percentage is based on the vehicle’s CO2 emissions (or electric range for hybrid vehicles). The percentage may increase by 4% for diesel cars if they do not meet RDE2 standards. The BIK percentages have been frozen until the 2024/25 tax year.

To calculate the BIK tax on a car, you multiply the list price or P11D value of the car by the BIK percentage, then multiply again by your tax band. The Fuel Benefit for cars is calculated by multiplying the Car Fuel Benefit Multiplier by the BIK percentage, then multiplying again by your tax band. The multiplier for 2023/24 is £27,800. This is set by HMRC for each tax year.

Example

You are a basic rate taxpayer, who had received a non-RDE2 compliant diesel car from your company with a list price of £17,000 and CO2 emissions of 117 g/km. The tax you would pay is as follows:

BIK % = 28+4 = 32%

Annual Benefit In Kind (BIK) Tax = 17000*32%*20% = £1,088

Car Fuel Benefit Charge = £27,800*32%*20% = £1,779.20

Total Tax Owed = £2867.20

Paying for Benefits In Kind – Employers

BIKs are filed by employers using P11D forms. This will account for the benefit by increasing the individual’s salary. Employers will pay a National Insurance Contribution of 13.8% on the value of the BIK. The total BIKs per tax year must be reported by employers using a P11D(b) form, which summarises the benefits provided to all employees during the period. This must be submitted by 6th July following the period. For example, the P11D(b) form for the 2023/24 tax year must be submitted by 6th July 2024.

Paying for Benefits In Kind – Employees

Employees will likely pay for BIKs through their tax code. HMRC will amend the employee’s tax code to allow the tax owed to be deducted from their wages. It can, however, take time for the P11D submission to be processed and therefore you may receive a notice stating you have underpaid your tax for the year. HMRC will collect the due tax via an updated tax code in a future tax year, or by issuing a simple assessment which allows the tax to be paid in one lump sum.

 

If you have any further questions about how Benefits In Kind apply to your business, or you are unsure of how they affect your tax, contact us for guidance.

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Double Cab Pickups – Benefit In Kind Changes

Update – Government U-Turn

On 19th February 2024, 1 week after the classification criteria was updated, HMRC announced a full U-turn on the treatment of double cab pickups. It has been decided that they will now continue to use the payload system to classify vehicles, as explained in our “How Were Double Cab Pickups Treated Previously?” section. This has occurred due to push back from the motor industry over the significant increase in tax the change would have caused for most double cab pickup owners.

 

Changes to the tax treatment of double cab pickups have recently been announced by the government. This will change how benefit-in-kind tax is calculated for these vehicles if owned by your company. These changes will be introduced to remove a loophole which allowed them to be accounted for as vans rather than company cars. The tax paid on vans is usually lower than the tax paid on cars.

How Will Double Cab Pickups be Accounted for?

For vehicles ordered on or after 1st July 2024, new criteria will dictate that almost all double cab pickups will be classed as cars. This is due to the new legislation used to determine how a vehicle should be classified.

 If a vehicle’s primary suitability is construction, it will be classed as a van. This means that the vehicle must only be used for transporting goods. As double cab pickups can transport both goods and passengers, they cannot be classed as vans and must be treated as cars.

Vehicles that are already on fleet or have been ordered prior to 1st July will be treated as they were until 5th April 2028.

How Were Double Cab Pickups Treated Previously?

The old criteria that were used to decide whether a vehicle was a car or van was dependent on payload. A vehicles payload is usually given in the manufacturer’s manual and is equal to the gross weight minus the unoccupied kerb weight.

Vehicles with a payload under 1 tonne would be classed as cars, whilst those which are 1 tonne or over would be classed as vans.

Double cab pickups are much heavier than standard cars; they would almost always meet the old van criteria.

Will All Double Cab Pickups be Classed as Cars?

Not necessarily. Within the legislation, the government have included exceptions which could allow double cab pickups to be classed as vans. This is dependent on whether modifications have been made to the vehicle.

The modifications must be “sufficiently permanent & substantial in scale”. Examples provided include replacement of the rear side windows (either with metal panels or fibreglass) or welding a new load base.

Defining whether a modification can fit the criteria can be difficult. For example, removal of the rear seats of a double cab pickup would only be classed as substantial if all the related fittings are also removed. The easiest way to check that the modification is substantial is if it could be easily reversed. If so, the changes cannot be used to justify the van classification.

How does the Benefit in Kind Differ?

A benefit in kind (BIK) is defined as goods and services received by employees or directors from a company which are not included in their salary, for example a company vehicle. The method of taxing these BIKs is dependent on the type of vehicle they are classed as.

Vans use a flat rate to calculate the tax owed. On the other hand, the tax owed on cars is dependent on the CO2 emissions and list price of the vehicle. Please see our Vehicle Benefit In Kind Breakdown for more information on how it is calculated.

Example

The tax owed by a basic rate (20%) taxpayer on a petrol-powered double cab pickup with a list price of £20,000 and CO2 emissions of 170 g/km would be calculated as follows if it was classed as a car:

BIK% = 37%

BIK Tax = 20000*37%*20% = £1,480

Fuel Benefit Tax = 27800*37%*20% = £2057.20

Total tax owed = £3,537.20.

The calculation for the same vehicle if classed as a van is as follows:

BIK Tax = 3960*20% = £792

Fuel Benefit Tax = £757*20% = £151.40

Total tax owed = £943.40

You would have to pay £2,593.80 more if the vehicle was classed as a car. As double cab pickups tend to have both high list prices and high emissions, the tax owed will almost always be higher when classed as a car.

 

If you are unsure about how these changes could affect you, or you have any other queries about tax, please contact us

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Tax on Ebay, Vinted and Airbnb Sales

From 1st January 2024, digital platforms such as Ebay, Vinted and Airbnb will be required to collect and report information on their sellers’ income. This has raised concerns with users of these online marketplaces, but how much will they be affected?

What do the New Rules Mean?

Digital platforms will now need to provide breakdowns of sales made on their sites by sellers of goods and services by the end of January 2025. HMRC hopes that this system will allow information to be exchanged more quickly and efficiently. It will be as available as tax information of traditional businesses, making the tax system fairer.

It has been ruled that the digital platforms must provide a copy of the information given to the seller. This will help users to evaluate if they will need to pay tax. It also allows for transparency with what is being shared.

Examples of platforms which will be impacted include Ebay, Vinted, Depop, Etsy, Amazon, Airbnb, Uber, Deliveroo, and Fiverr.

What Information Will Digital Platforms Share?

Digital platforms will be required to provide the following information to HMRC:

  • The seller’s name.
  • The seller’s address.
  • The seller’s National Insurance number.
  • Income earned during the year.
  • Any fees incurred on the platform during the year.

If the income relates to property lets (i.e., Airbnb listings), the addresses of these properties will also be provided.

It is possible that digital platforms will increase their fees to cover the admin cost of providing this information, however this has not been confirmed.

Do I Need to Pay Tax on my Online Income?

You will only need to pay tax on your online income if you are trading or making capital gain.

To be classed as trading you must be producing or purchasing goods for resale with the intention of making a profit. If you are selling items from around the house that you already owned it is unlikely that you will be required to pay tax.

If you are trading, but your income from the digital platform was less than £1,000 (before expenses) you are not required to inform HMRC. This is because it will be covered by the Trading and Miscellaneous Income Allowance. The allowance is available to all sole traders.

Examples

Vinted, Ebay, or Depop income you receive after selling clothes from your own wardrobe that you no longer wear is not trading; you would not be taxed. However, selling clothes you have purchased purely to resell for profit through these digital platforms is trading, and would be classed as taxable income.

If you were to sew the clothes yourself and sold them through Etsy or Amazon, this would also be classed as taxable income.

You can find more information about self-assessment tax returns here. Unsure of how to pay your self-assessment bill? Please find more information here on the topic. And, if you have any further questions regarding these changes or tax returns, do not hesitate to contact us.

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Self-Assessment – How to Pay

With the deadline for Self-Assessment approaching, it’s important to know both how to make your payments, and when to pay them.

What is Self-Assessment?

The self-assessment allows HMRC to collect income tax. Untaxed income must be included on a self-assessment. It will cover a tax year. Tax years run from 6th April to 5th April in the following year.

Who Needs to Complete a Self-Assessment?

You will need to complete a self-assessment if you have income that needs to be taxed. Examples of individuals who need to submit a tax return include:

  • Those with untaxed income.
  • Sole traders who have earned more than £1,000 during the tax year.
  • Directors who have drawn dividends during the tax year.
  • Those receiving income from rental properties.
  • Those with a taxable income of over £150,000.
  • Those who must pay the High Income Child Benefit Charge.

If you are unsure whether you will need to submit a tax return, you can check here.

What are the Self-Assessment Deadlines?

It is important that your self-assessment is submitted on time to avoid penalties. The deadlines are as follows:

  • Notifying HMRC that you need to submit a tax return – 5th October.
  • Paper tax return submissions – 31st October.
  • • Online tax return submissions – 31st January.
  • Payment Deadline – 31st January.

Each of these deadlines relate to the following tax year. For example, if you started renting a property in May 2023, you would need to submit a 2023-24 self-assessment. You would need to notify HMRC of this by 5th October 2024. If you were to submit a paper return for this period you must do so before 31st October 2024, or 31st January 2025 if it was submitted online. Your tax return payment must be made by 31st January 2025.

How Do I Pay my Self-Assessment Tax Bill?

There are a variety of methods which can be used to pay HMRC. These include Direct Debit, Faster Payments, CHAPS, and by Cheque. HMRC provide a breakdown of how each payment method works, and what information you will need to make them. You can find this information here.

When paying your tax bill, you should include a specific payment reference. This will be your 10-digit Unique Taxpayer Reference (UTR), followed by the letter “K”. If the wrong reference number is used it can lead to payment delays. You can find your UTR number on your HMRC online account or letters you receive from HMRC.

Paying via Tax Code

If eligible, you can pay your self-assessment tax code using your PAYE tax code. This means that the tax you owe will be automatically collected from your salary like your usual tax deductions. This can only be done if you meet the following criteria:

  • Your total tax bill is less than £3,000.
  • You already pay tax through PAYE.
  • Your self-assessment was submitted before 31st October by post/30th December online.

You can’t pay using your tax code if your taxable income does not meet the PAYE threshold, if you would be paying more than 50% of your taxable income in tax, or you would be paying more than twice your usual tax deduction.

If you meet all the criteria, HMRC will automatically collect the tax through your tax code unless specified on your tax return.

Budget Payment Plan

A Budget Payment Plan can be set up with HMRC to make payments towards the tax bill throughout the year. You can choose how much you pay and how often (e.g. weekly or monthly). The amount paid through the plan will be deducted from your next tax bill. If the payments do not cover the bill in full, you will pay the remainder by the deadline on 31st January. If you have overpaid, you can request a refund.

You can only set up a Budget Payment Plan if your self-assessment payments are up to date. You can check whether you are eligible here.

What are Payments on Account?

Payments on account are advance payments which are made towards your tax bill. You will make two payments a year, each being half of the tax bill from the previous year’s tax return. These payments are due by midnight on 31st January and 31st July. If, at the year end, your tax bill is greater than the sum of the payments made, you must pay the difference by 31st January the following year. This is known as the balancing payment.

For example, if your tax bill for the 2023-24 tax year was £2,500, and the sum of the payments on account came to £2,000 in 2024, the payment you would make on 31st January 2025 would be £1,750. This is made up of:

  • £500 for the balancing payment for the 2023-24 tax year.
  • £1,250 for the first payment on account for the 2024-25 tax year.

Please note that Payments on Account do not include capital gains or student loan payments. These will always be included as a balancing payment.

If you know that your tax bill will be less than in the previous year (i.e. you are now renting out one property rather than two), you can apply to reduce your payments on account. This can be done online via the Government Gateway or by post. You can find more information about this here.

What Penalties can be Issued for Self-Assessments?

The penalties HMRC can issue for self-assessments fall into two categories: late filing and late payment. Both types of penalty can be incurred at the same time.

A late filing penalty of £100 will be charged if the submission is 1 day late. Further penalties will be applied after:

Period Penalty Applied
3 months £10 per day, for a maximum of 90 days
6 months The greater of 5% of the tax owed or £300
12 months The greater of 5% of the tax owed or £300

For late payments, the penalties will be applied after:

Period Penalty Applied
30 days 5% of the tax owed
6 months Further 5% of the tax owed
12 months Further 5% of the tax owed

If you receive a penalty which you disagree with you can appeal this with HMRC. Appeals must be made within 30 days of the penalty notice date and can be filed either online using a Government Gateway account or by post using an SA370 form. You can find more information about both methods here.

What Happens if I Over/Underpay?

No matter which payment method you use, if you overpay your tax bill, you will receive a refund from HMRC. If you have underpaid, interest will be charged. You will be able to track if your payments have been received on your HMRC online account.

 

If you have any further questions about paying your Self-Assessment tax bill, please contact us.

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Claiming unpaid mileage

Claiming unpaid mileage by employer?

If your employer doesn’t pay for mileage allowance at all you are entitled to claim Mileage allowance relief (MAR) on your work-related mileage at the HMRC advisory mileage rates.

For the first 10,000 miles for cars and vans the rate is 45p, then the rate drops after 10,000miles to 25p per mile. for motorcycle this is 24p for all mileage and Bicycles is 20p per mile. Remember you can claim up to 4 years if you have not done the claim previously.

If you are reimbursed by your employer at a lower rate than the HMRC approved mileage rates, you are entitled to Mileage allowance relief (MAR) for the difference. For example, if you drive your own car and have been reimbursed at 30p per mile for 3000 miles, you can claim the mileage allowance relief on £450 (3000*0.15).

How do I claim mileage relief?

The are 2 ways you can claim for mileage tax relief:

  1. If you already complete a tax return (self assessment) the mileage claim can be added on the business travel (on the employment pages on your tax return)
  2. Submit your claim using a P87 form. This can be submitted online through the HMRC Government Gateway, or printed and sent by post.

Remember to claim mileage allowance you will need to keep a mileage log/record for all business trips done during the year. For record to be sufficient as per advisory you need the records to contain the following details:

  • Date of trip
  • Distance covered.
  • Start and finish point always good idea to included full address and post code.
  • Total mileage
  • Mileage allowance already received from employer.

With advanced technology nowadays you do have apps you can use to track your mileage, or a hard copy record is also sufficient. You can find more information on how to make a tax relief claim here.

For more information about mileage and expenses claim, or If you have any further questions about tax reliefs, or any other accounting matters, please contact us. We can offer this as a service, but it will incur a small fee.

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Autumn Statement 2023

On 22nd November 2023, the Chancellor of the Exchequer, Jeremy Hunt, set out the UK Government’s plans for the country’s economic growth in the 2023 Autumn Statement. This blog will outline the effects of these announcements on the public.

Growth, Inflation & GDP

It has been announced that forecasts produced by the Office for Budget Responsibility (OBR) show that the UK economy will grow by 0.6% this year and is now 1.8% larger than it was pre-pandemic. This is despite predictions in March that it would shrink by 0.2%. The rate of growth predicted earlier this year, however, was higher, meaning that the current forecast sees only a 0.6% improvement in growth for 2027 when compared with the March projections.

Inflation is currently at 4.6% and it is expected to fall to 2.8% by the end of 2024. A target of 2% has been set for 2025.

The Autumn Statement shows that GDP is expected to rise over the next four years, reaching 2% in 2027.

National Living Wage

From April 2024, the National Living Wage will increase to £11.44 per hour. This is a 9.8% increase from the current rate of £10.42. It is important to note that from April 2024, the rate bracket for ages 21-22 will be scrapped; workers aged 21 and over will be entitled to the National Living Wage.

Rates for the 2024 National Minimum Wage (workers aged 20 and under) are as follows:

  • Under 18s and apprentice rates – £6.40 per hour
  • 18–20 year-olds – £8.60 per hour

Please note that the apprentice rate only applies during the first year of the apprenticeship if the apprentice is aged 19 or over.

Employee National Insurance

Starting on 6th January 2024, Employee National Insurance will be cut to 10%. This is a 2% decrease from the current rate of NI. On an average salary of £35,000 a year, there will be a saving of £450. The government believes that decreasing employment taxes will increase employment rates as a higher net wage acts as an incentive to find work.

Taxing the Self-Employed

Self-Employed individuals currently pay Class 2 National Insurance at £3.45 per week (if your profits are over £12,570) and Class 4 National Insurance at 9% on profits between £12,570 and £50,270. The Chancellor has announced a reform for how the self employed are taxed. This means that, from April 2024, the Class 4 NI rate will be reduced to 8%. Class 2 NI will be abolished.

Pensions

In line with the pensions triple lock, the state pension will increase by 8.5% to £221.20 per week.

A call for evidence has been launched by the government relating to a “lifetime provider model” of pension schemes. This would allow contributions to be paid into an existing scheme when changing employers, rather than having several “small pot” pensions.

Benefits & Back to Work Scheme

It has been announced that Universal Credit and other benefits will be increasing by 6.7% from April 2024. This is in line with the September 2023 inflation figure.

£1.3 billion is set to be invested over the next five years to help those with health conditions find work. A new “Back to Work” scheme will also be introduced which will implement mandatory work placement for claimants who have been unemployed for 18 months. If this is not engaged with the claimant may have their benefits claim closed.

Full Expensing

Full expensing is a form of relief which allows businesses to claim 100% of capital allowances on investments in qualifying fixed assets. This was originally intended to cease in March 2026; however, it has been announced today that it will now be implemented permanently.

Research and Development

The Research and Development Expenditure and SME relief schemes will be merged in an effort to simplify tax. The tax rate applied to losses will be reduced to 19%. This will apply to R&D expenditure incurred during accounting periods beginning on or after 1st April 2024.

Additional Announcements

The following information has also been announced within the Autumn Statement:

  • The local housing allowance, which has been frozen for three years, will increase, being raised to the 30th percentile of local market rents.
  • The Small Business Procurement Act means that 30-day payment terms will now apply throughout the subcontract chain.
  • The small business multiplier has been frozen for another year. It has remained at 49.9 pence since the 2020-21 tax year.
  • Business rates relief for hospitality, retail and leisure has been extended for another year.
  • Alcohol duty will be frozen until August 2024.
  • Tobacco duty will increase from 22nd November 2023.
  • A further four investment zones will be introduced. These will be in the East Midlands, West Midlands, Greater Manchester and Wrexham, Wales. They hope to increase employment in those areas.
  • Increased funding has been proposed for apprenticeships, technology and AI development, and regeneration projects.
  • £4.5 billion has been proposed for supporting companies on the approach to the Net Zero deadline over the next 5 years.

If you have any concerns regarding the changes set out in the Autumn Statement and how they could impact you and your business, do not hesitate to contact us. You can find our contact information here.

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